Data-driven workforce planning and org design

How HR can get better at strategic workforce planning

In this podcast, Rupert Morrison discusses how HR needs a serious step-change in order to manage the business and not just human resources in times of change. Why Finance is often stepping in on workforce planning and how HR must partner with them. And what role analytics plays in shaping the future workforce.

This episode is a must-listen for any HR professional who wants new ideas, wants to add value to their organization and wants a voice at the Board-level, not just lip service. Hear about some of the most pivotal and challenging issues that HR isn’t addressing.

To watch the quick 7 minute summary of the podcast simply click to play. To hear the full 45 minute version go to MyHRFuture.

Recorded on 15^th October, 2019

Transcript

David Green: Today, I’m delighted to welcome Rupert Morrison, CEO of Orgvue and author of Data-Driven Organisation Design, to the Digital HR Leaders podcast.

Rupert Morrison: Great to be here, thank you.

David Green: Thank you. Rupert. Can you give a quick introduction to yourself and your background?

Rupert Morrison: I grew up on a farm in New Zealand, had fun riding motorbikes and then studied mathematical economics. [I had a choice to] go into investment banking or management consulting and chose [the latter]. [Although I loved the work, I] got quite frustrated because [it was] all visualized in PowerPoint [and] mostly crunched in Excel, and customers would say to me, “what am I going to do in six months’ time?”

[Because] the work we were doing was strategic in nature, if [we] could maintain the analytics, it would give a lot of value into the future. So, I set up a company [to] combined technology [with] management consulting and developed Orgvue. That was 12 years ago.

Organizational design for a digital world

David Green: [Whenever we speak,] I’m always fascinated by your vision around organizational design. [Could you] share with [our] listeners why organizational design is becoming more and more important?

Rupert Morrison: Org design starts with strategy [and] presupposes you can document that strategy [and] organize [to] execute [it]. That’s what it’s fundamentally about. The mistake [many] people make is to see the organization as [simply] the org chart and who reports to who.

[Organizational design] is having a systems approach, which is nothing new. [But] you [need] to understand the work, activities, and accountabilities. You [also] want to know what competencies, skills and behaviors you need to be effective at doing the work. Then you need to think about what the roles you need and [how] those roles [are] broken into positions, with people filling those positions.

Most organizations are there to keep on growing and to do that, you need to continually evolve [despite the disruptive environment]. Disruption’s always been around, but now the pace [is much faster]. We call it ‘designing for disruption’.

Forward planning is essential to competitiveness

Rupert Morrison: I was listening to one of your previous [podcasts with] Dave Ulrich. [He said,] “people can be champions, but organizations win championships.” And he went further to say, “it’s not talent or people that provide the competitive edge, but organization systems.” I was fascinated [by] that, because that’s very much what we believe. [But] how do you do that in practice, create that forward planning process, so you can be competitive in the marketplace.

David Green: The forward planning part is interesting. If we look at HR [today], there seems to be a fundamental problem. Things [are] becoming more dynamic, organization design is increasing in importance, frequency, and complexity, but the majority of HR functions don’t have the tools and capabilities to succeed. When we were talking last week, you drew a nice link between Finance and HR and the need to distinguish between operations and planning.

What can HR do to become more strategic?

Rupert Morrison: So, let’s start with Finance, which is broken into two sub functions. There’s financial control, [which is] accounting, bookkeeping, credit control, treasury. Without that, you [don’t have a] But it’s not the financial controller that [advises] the CEO and the executive team. It’s the other finance function.

Financial planning and analysis (FP&A) does the budgeting and analysis, so you can execute the strategy from a financial perspective. FP&A [does the] forward planning [that] drives the business forward. 25% [of finance function] is FP&A, so it’s a huge investment.

Now in HR, [there’s] HR operations, [which is] talent acquisition, employee lifecycle management, [and] dispute resolution. [Like financial control,] this is fundamental [to your business]. But you also need organizational planning and analysis (OP&A), which is tied to organizational design and workforce planning.

Every month you have new positions that are come and go. [That] dynamic process is workforce planning; it’s also forward-looking analytics. The mistake people often make [here] is that they think about historical analysis and [aim for] predictive [analytics]. I disagree because it’s not just about predicting the future. It’s about planning the future against strategy, and [that’s] OP&A. [But for] most HR functions, [OP&A is] at most 1% to 2% [of HR].

Organizational planning and analysis doubles productivity growth

David Green: So, what’s the business impact of good OP&A?

Rupert Morrison: We just did [some] research with the CEBR and what they found is that people who invest in organizational planning and analysis have a two-fold increase in productivity growth. For the UK economy, that’s over £10 billion. GDP growth would jump by half a percentage point. [That’s] significant at a macroeconomic level, let alone at an individual business level. [But] most organizations invest very little [in this], less than £10,000 [a year].

[But instead of OP&A, many organizations make short-term changes to their workforce using] a single measure – span of control. [They don’t] think about the work, the relationships, the competencies. They just reduce the org structure to take cost out.

David Green: You gave a good example last week [when] you compared two people with the same span of control. But when you get into the detail, [they’re] very, very different.

Rupert Morrison: You’re talking about ‘burden of management’. We think [it’s] a [much] better measure. So, you’ve got Adam and Bridget. They’re both managers [with] a span of control of eight. But everyone that reports to Adam is in the same office. With Bridget, different locations, different time zones. Adam’s team is experienced [and has] been [with the company] a long time. Bridget [has many] new people [and there are] performance issues. Adam’s [people] all do the same job, [so he’s] managing one set of KPIs [for] eight people. [But] Bridget [has people with] different jobs, different job titles in different sub functions. So, which is harder? [Clearly] Bridget’s by some margin.

[With] all that data, you can look at performance, tenure, and individual relationships with the manager to [see] how easy or hard [the team] is to manage. And when heat map your organization [based on this], you can start to see risk. There’s probably a reason why there’s high churn on that team.

Why HR should invest more in forward planning

David Green: So, why [do you think] more HR functions aren’t investing in [OP&A]? And what are the key building blocks for HR to build this capability?

Rupert Morrison: The first thing is [that] FP&A isn’t run by people who were financial controllers. They come from other places, [like] investment banking or corporate finance. [Similarly], OP&A is a different discipline to talent acquisition, L&D [etc]. You need to educate yourself and [have] the right technology. And it’s not just one set of technology, and certainly not just Excel. People rely on Excel and PowerPoint and that’s just [not enough] at the speed you need to work.

You also need systems, people with the skills, and different types of roles. You need people who can design competency taxonomies, who can think about role architecture and connect the dots. You need people who can communicate and influence senior executives. It needs conviction and investment; it doesn’t just happen in two or three weeks. This is a monthly operational process and it’s important to bring in financial data, [such as] cost center information by function, business unit, and geography.

Specialist software for the strategic HR function

David Green: How does Orgvue help companies solve some of these problems?

Rupert Morrison: You [can use your existing data to] create new data, [such as] position, competency, and activity data and connect to value. [With] OP&A metrics, you’re able to do role design, to set those roles and [generate] a job description from the data.

Orgvue is a SaaS platform used by growing OP&A functions and anyone doing transformation – that’s a big use case for us. It’s [also frequently] used by the consulting industry. [Fortunately] the days of Excel and PowerPoint are over.

David Green: And from speaking to some of your customers over the years, they’ve said what’s really powerful [is] they can take [Orgvue] into meetings with executives and model different scenarios [live], almost in real time.

Rupert Morrison: It’s literally in real time. If you want to take everyone who’s got a span of control less than X [for example,] in five seconds, you can drag [and] drop, redraw the org chart and see who’s going to be affected.

David Green: And better utilization of time.

Rupert Morrison: One of our consulting partners said they’re four times faster at doing this work [using Orgvue].

How will HR look in 2025?

David Green: So, moving on, we ask this question of all our guests on the show, and you can go beyond 2025 if you want. What do you think the role of the HR function will be [like] in 2025?

Rupert Morrison: Competencies are changing, work is changing. In my view. OP&A has to be at the forefront. The Chief People Officer should be spending more of their time thinking about OP&A and helping the business drive forward, effectively [being] the HR business partner for the executive. OP&A [should be] the brains of the organization [alongside] FP&A, working in unison, at speed.

David Green: So hopefully by 2025 every company will have an OP&A capability, which is representative and similar to Finance. [And that] it’s 25% of the HR investment.

Rupert Morrison: I would hope so, I really would. I think the right HR function is giving the right skills and competencies and role focus so that everyone’s successful and therefore you have great organizations.

Disruptive change is a fact of life for almost every organization and HR has an opportunity to be the standard bearer for continuous organizational design. But first it has to become more strategic and forward looking alongside its operational responsibilities. Most HR functions spend at least 98% of their time on transactional tasks and working with historical data.

Instead, HR should be investing time and money in organizational planning and analysis (OP&A), a new discipline that works in partnership with FP&A to design a sustainable future for today’s organizations. Read more about OP&A and how it can transform the outlook for your organization here.

Hear the full 45 minute version of the podcast, visit MyHRFuture